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The Gender Gap in Raise Magnitudes of Hourly and Salary Workers

Abstract

The gender gap in promotions literature typically uses survey to survey imputed hourly wage changes to measure the earnings effects of promotions alone. By distinction, we study raises with and without promotions using data within surveys that uniquely identify both the current and most recent wages of hourly workers separate from salary workers. In cross-section estimates we identify a gender gap in raise magnitude favoring men only among hourly workers who achieve promotions, but this result vanishes in fixed effects estimates. No gender gaps emerge in any other instance, including for salary workers and raises absent of promotion. We further contribute to the literature by uniquely controlling for natural ability and risk preferences of the workers, the time passed since earning the raise, and also whether the responsibility of the worker’s job changed with the raise.

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Notes

  1. 1.

    Indeed, an anonymous referee makes the important point that it can take women longer than men to earn raises and promotions. This observation perhaps results from the higher promotion standards for women the glass-ceiling model suggests. Unfortunately, controlling for these circumstances is a limitation of our data.

  2. 2.

    Workers are least likely to report a daily pay rate.

  3. 3.

    We propose there is less ambiguity in projecting weekly, bi-weekly, semi-monthly and monthly payments into an annual payment since these, as a segment of a year, are fixed. On the other hand, it is not known how many days are worked in a year, which introduces difficulty in accurately calculating annual earnings using daily payment data. Since workers may not work all 52 weeks in a year, we also run our salary pay regressions using samples excluding weekly reported earnings, and finally using only annually reported earnings. Our results remain unchanged.

  4. 4.

    It is this characteristic of our model that we believe is likely the reason why our specifications have relatively little explanatory power.

  5. 5.

    It is important to note that these percentage changes are only rough approximations, as differences in natural logs are only close to percentage differences when the differences are small. While interpretations to percentage changes warrant caution, simple magnitude comparisons such as these done here are satisfactory.

  6. 6.

    Obtaining promotion instances is done using a question asking whether workers were promoted since the last interview. Since these data are biennial, this time period is roughly two years. Table 2 indicates that the average time since getting a raise is between 10 and 12 months. Although it is likely a reported raise coincides with a reported promotion, it is not technically linked in the data.

  7. 7.

    We include fringe benefits in our analysis following the work of Baughman et al. (2003) and Woodbury (1983).

  8. 8.

    It may be important here to reiterate that the sample is made up of all workers who experienced a wage change only within their employer. Thus, we are omitting all workers that may have earned a significant raise by switching employers. Perhaps salary workers engage in this type of employer switching more often than hourly workers and earn significant wage increases in this way.

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Correspondence to Benjamin Artz.

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Appendix

Appendix

Table 7 Gender gap raise magnitude comparison between working and omitted observations; OLS difference in survey-to-survey log wages (NLSY 1996, 1998, 2000)

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Artz, B., Taengnoi, S. The Gender Gap in Raise Magnitudes of Hourly and Salary Workers. J Labor Res 40, 84–105 (2019). https://doi.org/10.1007/s12122-018-9277-8

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Keywords

  • Gender gap
  • Earnings
  • Promotions
  • Wages

JEL

  • J31
  • J7